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Expectations for the real estate market in 2021

Mar 11, 2021 | Last news

In macroeconomic terms, 2021 is a year that will be clearly marked by uncertainty regarding the evolution of the real estate market due to the pandemic, both in Spain and worldwide.

We are currently observing a recovery in “K” of the economy, something that surprises some analysts, with some sectors that are recovering well above what was initially expected while, on the contrary, others will still have to face difficult months or they have even been forced to accept a disruption of their operating models that, today, seems definitive.

Regarding the national real estate market, the residential market is one of the sectors in which the indicators are moderately positive for 2021. Both national and international demand continues to be very active given that most real estate transactions are a consequence of changes in the family structure. It should be noted that the relationship of people with their homes has changed, the pandemic we are experiencing has led to new needs for residential solutions, a factor on which the high demand rates are based.

On the other hand, excess liquidity in the markets and historically low interest rates will continue to draw investors’ attention to the residential market. This segment has also been influenced by the increase in credit for housing last year, a trend that will probably continue throughout 2021. Despite the fact that the award criteria are more restrictive in terms of limits In LTV and effort rates, home loans will continue to be an option for families and young people to buy a home, which is a determining factor for the revitalization of the national residential market.

The biggest challenge in the real estate market will continue to be the limited supply, especially in solutions for the middle class. However, developers and investors are betting more and more on this segment. With the slowdown in construction in the tourism and services sector, it is expected to see a significant increase in the productive capacity of new homes.

In Spain, a country whose economic system is based on tourism and everything that this sector entails, the uncertainty is greater than in other European countries.

The current situation is generating changes in the demand for housing, which could bring with it an asymmetric behavior in the evolution of prices. This pandemic situation has led Spaniards to choose to look for their new home on the outskirts of urban centers, which implies an increase in demand in the periphery to the detriment of classic urban centers.

The rental market , when compared to the sale and purchase and despite the moderation of prices with falls of between 7% and 5% in cities such as Madrid or Barcelona, ​​continues to demand a higher rate of effort on the part of the Spanish. To this, we must add the increase in the supply of housing rentals from the tourist rental market.

In any case, the sale continues to be the preferred option for Spaniards when changing their home. This requires having sufficient savings to be able to meet both the 20% of the appraised value of the property that the banks require as entry and the additional 10% to pay taxes and fees. Despite all this, although it is true that a greater initial financial effort is required, the truth is that it is rewarded with a lower rate of effort in the long term, and that it will be reflected in the monthly income of families compared to than the rent, which, as has been shown, is higher.

2021 will be a year full of challenges and learning for all of us. However, the real estate sector will have the opportunity to position itself, once again, as a strategic pillar of the economic and social recovery of Spain. While it is true that there is uncertainty and that demand has been reduced, the reality is that the situation of the real estate market throughout 2021 will provide great opportunities for investors.

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